MReport November 2017

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ORIGINATION
THE LATEST
Fraud: How are
Mortgages at Risk?
CoreLogic recently took a look at the overall fraud risk outlook for 2017.
C
oreLogic Senior Director
of Fraud Solutions Strat-
egy Bridget Berg recently
took a look at the overall
fraud risk outlook for 2017. Based
on CoreLogic's information, fraud
risk increased by about 17 percent
year-over-year and is now at its
highest level since 2010.
"Keep in mind, however, that
in historical terms, fraud, overall,
is still relatively low, given the
tighter underwriting since the
mortgage crisis, and the amount
of rate and term refis over the
past few years," said Berg.
However, in 2017, despite the
decrease in application volumes,
the total number of applications
with fraud is higher than last year,
in fact, CoreLogic discovered 13,404
applications with indications of
fraud in Q2 2017 alone.
Berg said there are two main
drivers of fraud risk increases this
past year, including a continued
increase in purchase transaction
share from 55 percent of applica
-
tions to 66 percent over the last
year. The other factor is origina-
tions coming through wholesale
channels, as these loans have
"historically exhibited a higher
risk of fraud."
According to Berg, there are
three types of mortgage fraud on
the rise for 2017. First, occupancy
fraud risk has increased by 7
percent, which includes traditional
occupancy risk and reverses oc
-
cupancy risk. Second, transaction
fraud risk covering straw buyers
and falsified down payments has
increased about 4 percent. The
third type of risk is income fraud
risk, which increased 3.5 percent,
with "most of the increase happen
-
ing in the first half of this year."
Regionally, the top three states
that are at risk for mortgage
fraud are New York, New Jersey,
and Florida. However, the states
showing the greatest growth rate
in fraud are lower-risk states in
the middle of the country, includ
-
ing, Iowa, Indiana, and Missouri.
Berg notes that for the future,
CoreLogic will be monitoring
cash-out refinances and home
equity loans, as rising home prices
and homeowner equity, they are
forecasted to become prevalent.
The fraud risk on these products
is higher than it is for rate and
term refinances, so Berg said this is
another area to watch over time.
A Helping Hand
to Achieve
Homeownership
Most renters intend to purchase
a home someday, but according
to research by Fannie Mae, the
down payment could keep them
from that dream.
A
ccording to the survey,
nearly half of respon-
dents see the down
payment as the biggest
obstacle to getting a mortgage.
Though 73 percent of current or
past homeowners surveyed said
they could have afforded a home
without their families' help, one-
fifth reported receiving financial
assistance from family when they
bought their first home. Addi
-
tionally, they also tend to be the
group that has the highest home-
ownership rates. Among millenni-
als, almost two in three reported
their families helping them with
at least half of the upfront costs of
homeownership.
"Hispanics and noncollege
graduates, whose homeownership
rates tend to be lower than the
general population's, are less likely
to say they received financial
assistance when buying a home,
even when controlling for other
factors," the report stated.
The two primary reasons for
renting now were financially pre
-
paring to own a home (28 percent)
and the fact that renting is more
affordable (25 percent). Following
affording the down payment (45
percent), respondents believed
the biggest obstacles for getting a
mortgage included an insufficient
credit score or credit history (43
percent), too much existing debt
(18 percent), and the process being
too complicated (16 percent).
Though minorities were hope
-
ful they would be able to provide
financial assistance to family in
the future, they were no more
likely to have reported providing
financial support in the past.
In the general population, 38 per
-
cent expect to give aid in the future,
and 16 percent already have assist-
ed—for Caucasians: 31 percent and
18 percent, Hispanics: 51 percent and
16 percent, and African-Americans:
53 percent and 12 percent.